Page 12 - Boca Club News - February '22

Page 12, Boca Club News
Legal: Contract Contingencies (Part Two)

By Michael J Posner, Esq., a partner possible contingencies that can arise in a real estate sale In addition, the most recent version of the standard Far Bar
in Ward, Damon, Posner, Pheterson & because of the unique characteristics of real property. Here Contract has removed appraisal valuation as grounds for
Bleau, P.L. a mid-sized real estate and are some of the more common clauses that I have used in my termination after the expiration of the Loan Approval Period.
business-oriented law firm serving practice: Therefore, if the appraisal is delayed a buyer can have loan
all of South Florida, with three Kick-Out Clause. Because most buyers impose approval and then face a low appraisal which results in
offices in Palm Beach County. They contingencies on their closing (though with the market, in withdrawal of financing or the requirement for more money
specialize in real estate law and can its current seller-favored condition, there are many contracts down. In order to avoid this issue, a buyer can ask for an
assist sellers and Buyer with closing with no contingencies) sellers can lose a buyer and time to appraisal contingency as follows:
and financing of residential and a bad inspection, a financing problem or even a buyer who The Contract is conditioned upon Buyer obtaining an
commercial real estate. They can be reached at (561) 594- is making multiple offers on homes and canceling on any appraisal for the Property equal to or greater than the
1452 or at mjposner@warddamon.com. number of contingencies. To potentially avoid these issues, Purchase Price. In the event the appraisal is less than the
Last issue we looked at some of the common contingencies a seller can deploy a kick-out clause such as the following: Purchase Price and the Seller is unwilling to ratably reduce
in residential real estate contracts. There are many other Until such time as Buyer waives Buyer’s (insert the Contract price by the actual difference between the
contingencies) Seller shall have the right, but not the Purchase Price and the appraised value, in writing, within
obligation, to continue to market the Property for sale. In two (2) days of presentation of the appraisal, then the Buyer
Medical Matters: Dementia Revisited from page 11 the event Seller receives a bona-fide offer to purchase the shall have the option of terminating this Contract and upon
Property, Seller shall present said offer to Buyer, in which termination, all deposits paid hereunder shall be returned to
will develop it compared to 10 to 15% of the general event Buyer shall have three (3) days to notify Seller of Buyer and this Contract shall be of no further force or effect.
population and 10 years earlier in life, and they will pass Buyer’s waiver of all contingencies. If Buyer does not timely Special Contingencies–Buyers who have special needs
it on to their children. Fortunately, this occurs in only exercise said right, this Contract shall be null and void and should make sure that their purchase contract is contingent
3% of the population. When just one abnormal gene is of no further force and effect, and Buyer shall receive the upon approval of these requirements. This can include a
present (25% of the population), the risk of Alzheimer’s return of all deposits paid hereunder. special pandemic requirement, approval of an emotional
is doubled but not likely to be inherited. At the present Sale of Residence–Most buyers are dependent upon the support animal, the ability to construct a pool or ramp for
time, providing a blood test for this gene is restricted to sale of their existing home to provide the funds necessary to a handicapped person, or the ability to use the property for
those individuals with a strong family history as testing close on their purchase. Buyers also wish to have a seamless special-purpose (the home I just purchased was previously
the entire population—75% of whom don’t have the transition from their existing property to their new property. under contract to be used as a bed-and-breakfast, a special
gene—is not feasible nor cost effective. Buyers can protect themselves from having to close before use that the local municipality refused to allow). A special
Incidentally, the APOE4 gene leads to high plasma they have sold their existing property by using the following needs clause is as follows:
levels of LDL cholesterol and is a significant factor in the contingency: The Contract is conditioned upon Buyer being able to
development of coronary artery disease. At present, there Buyer’s closing hereunder is contingent upon the use the Property for the following condition: __________
is under development a blood test to detect the presence successful closing on the sale of Buyer’s current residence in _________________________ (the “Special Condition”).
of the proteins amyloid and TAU, referred to earlier, good faith by Buyer on or before _______________, 2022 or If approval of such Special Condition is not obtained within
which form plaques and tangles that are the hallmark (_____) days from the Effective Date under this Contract. If ______(__) days of the Effective Date, Buyer shall have the
of Alzheimer’s. When they are found early they detect Buyer is unable to timely close, then upon written notice to option of terminating this Contract and upon termination,
the hidden signs of the disease years before the onset of Seller, Buyer may cancel this Contract, this Contract shall be all deposits paid hereunder shall be returned to Buyer and
symptoms. This would provide the opportunity to develop null and void and of no further force and effect, and Buyer this Contract shall be of no further force or effect.
treatments to prevent Alzheimer’s in those at risk–a shall receive the return of all deposits paid hereunder. Proper use of contingencies is a vital tool for buyers and
daunting task indeed. This test is not yet ready for clinical Appraisal–In the current real estate market the value of sellers in ensuring a smooth purchase and sale. Failure to
use as more work is needed to evaluate its performance homes continues to climb, and as a result properties may sell properly provide for contingencies can often lead to failed
in real world clinical settings. for higher than their appraised value. This can often cause sales and fights over the deposit. Buyers and sellers with
Part Two of this discussion of Dementia will appear in a problem for buyers who are stretching to purchase with special requirements should always consult with an attorney
my next column, in the March issue of Boca Club News. financing because a low appraisal would require a buyer to before signing a “standard” contract to ensure that they are
put more money down, money which they may not have. protected.